Southern Tanzania Mining Resources to be Explored

April 7, 2009

According to a recent report by the East African Business Week (EABW), the Tanzania National Development Corporation (NDC) and the Pacific Corporation East Africa (PCEA) have joined forced in order to form a company that will begin to explore and develop some of the potential coal resources in the southern Tanzania mining area.Together, the corporations for the company Tancoal Energy Limited (TANCOAL) and represents a joint venture that was originally registered in Tanzania in 2008.

Currently, the majority shares of the company are controlled by the Australian company, Atomic Resources Limited.

In the report by the EABW, the Director of TANCOAL, Gideon Nasari, said that the original purpose of developing his company was to develop the available coal resources in Ngaka and Mhukuru in the southern Tanzania region of Ruvuma.

According to Mr. Nasari, the primary purpose of the company will be to explore the available resources for mining in the area that can be correlated with the Tanzania energy sector.

The report went on to indicate that, at this time, TANCOAL is currently holding a variety of prospecting concessions which have been given to them as applications.

In addition, it has also been reported that Mr. Nasari said that his company sees the development of coal deposits found in Ngaka and Mhukuru, in the districts of Mbinga and Songea, as a potential solution to the recent issue of power loss and power shortages in the country.

Currently, USD 1.2 billion has been set aside for the development a coal feedstock, the construction of a 400MW coal-fired power station as well as the manufacturing of a long distance, high voltage transmission line.

As a result of the current drilling program, seam correlations as well as confirmed stratigraphic continuity and classification has been provided.

Initial findings from research that was conducted at Ngaka (Mbalawala) has indicated approximately 90 -120 tons of available coal reserves that are able to be mined through a combination of both opencast and underground methods.

According to the EABW report, TANCOAL has indicated that it believes that this project will result in the enhancement of national energy security by decreasing the country’s dependence on the imported electricity.

The EABW report went on to say that Mr. Nasari has expressed optimism that the current power tariffs will be reduced and that the current outflow and exchange risks of foreign currency that is required in for the purpose of purchasing fuel or for importing electricity from outside Tanzania will also decrease.

In addition, TANCOAL is also keen to create opportunities from the surplus power production to be used for export to other countries.